$3bn IMF deal: Electricity tariff, VAT, e-levy rates expected to go up

There will be a hike in electricity tariff, VAT, and e-levy rates as part of the conditions to secure a US$3 billion extended credit facility from the International Monetary Fund.

Electricity Company of Ghana

Among these conditions that were outlined by finance minister Ken Ofori-Atta are also the preparation of an ambitious 2023 budget, with a frontloading of the fiscal consolidation program and a comprehensive set of structural reforms, notably a public expenditure review.

The Bank of Ghana is expected to tighten policies that will bring inflation under control.

Finance Minister, Ken Ofori-Atta noted that the government adjusted revenue and expenditure measures to improve debt sustainability and restore macroeconomics aimed at addressing structural bottlenecks contingent liabilities of state-owned enterprises, commitment controls, and arrears accumulation as well as domestic revenue mobilization.

He mentioned that the government is committed to rebuilding reserve buffers, mobilizing external concessional financing from multilateral and bilateral partners, and suspending external debt service payments.

Also, he said the government will safeguard social protection programs and ensure the burden of adjustment is fairly distributed.

Additionally, he noted that social spending will be targeted to protect the most vulnerable from the impact of the economic crisis as well as fast-track the implementation of growth-oriented socio-economic policies, such as Ghana CARES to mitigate the impact of the pandemic and support economic recovery.

As part of measures to secure the bailout, the government is aiming at reaching a 1.5% of Gross Domestic Product primary surplus in the medium term, bringing inflation below 8% in the medium term, and restoring external buffers with gross international reserves reaching 3 months of import cover by 2026.

Also, the government is targeting a real Gross Domestic Product growth of 5% over the medium term and being competitive with exports surpassing 37% of GDP in the medium term.

These were captured in the Investors Presentation by Mr. Ofori-Atta and supported by the Governor of the Bank of Ghana, Dr. Ernest Addison.

Source: PulseGhana